Jhalawar Kendriya Sahakari Bank Ltd., Vs ADIT (I&CI) (ITAT Jaipur)
Introduction: The case of Jhalawar Kendriya Sahakari Bank Ltd. vs. ADIT (I&CI) revolves around a penalty imposed for non-compliance with tax filing regulations. This article provides a comprehensive analysis of the legal proceedings and the verdict of the ITAT Jaipur.
Detailed Analysis: The appellant, Jhalawar Kendriya Sahakari Bank Ltd., challenged the penalty order issued by the ld. CIT (Appeals), NFAC Delhi, dated 24.06.2022, concerning the assessment year 2019-20. The grounds of appeal primarily questioned the validity of the penalty order, amounting to Rs. 1,50,000, imposed under section 271FA of the IT Act, 1961.
The bank, registered under the Co-operative Society Act, cited genuine reasons for the delay in filing the Statement of Financial Transaction (SFT). Despite filing the SFT along with reasons for the delay, the revenue authorities upheld the penalty. However, the appellant argued that the delay stemmed from operational challenges, including network connectivity issues in rural branches and a lack of technical expertise among branch managers.
The appellant emphasized that the breach was technical and venial, lacking any contumacious conduct or deliberate defiance of the law. Judicial precedents were cited to support the contention that penalties should not be imposed in cases of technical breaches without evidence of deliberate wrongdoing.
Conclusion: After careful consideration of the arguments and legal precedents, the ITAT Jaipur ruled in favor of the appellant, Jhalawar Kendriya Sahakari Bank Ltd. The tribunal observed that the delay in filing the SFT was due to genuine operational challenges and did not involve any deliberate defiance of the law. Therefore, the penalty imposed under section 271FA was deemed unjustified and was consequently deleted.
This verdict underscores the importance of considering the circumstances and intent behind regulatory non-compliance, especially in cases involving technical breaches. It reaffirms the principle that penalties should only be imposed in cases of deliberate wrongdoing, not mere technical errors.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal by the assessee is directed against the order of ld. CIT (Appeals), NFAC Delhi dated 24.06.2022 for the assessment year 2019-20. The assessee has raised the following grounds of appeal :-
1. The impugned penalty order u/s 271FA dated 20.10.2020 as well as the notice u/s 271FA is bad in law, illegal and on facts of the case, for want of jurisdiction, barred by limitation and various other reasons and hence the same may kindly be quashed.
2. Rs. 1,50,000/-. The ld. CIT (A) has grossly erred in law as well as on the facts of the case in confirming the penalty of Rs. 1,50,000/-u/s 271FA imposed by the ld. AO i.e. Adl./ADIT (I&CI). Hence the penalty so imposed by the ld. AO and confirmed by the ld. CIT (A) being absolutely, contrary to the provisions of law and facts of the case and not in conformity with the law, hence the same may kindly be deleted in full.
3. The appellant prays your honour indulgences to add, amend or alter or any of the grounds of the appeal on or before the date of hearing.
2. The brief facts of the case are that the assessee is registered under Co- operative Society Act and carrying on banking business such as accept deposits, sanctioning loan etc, in rural areas to farmers and other small business persons. The ld. Add/JDIT(I&CI) noted that the assessee was required to file Statement of Financial Transaction as per Sec. 285BA of the IT Act, 1961 r.w.r. 114E of the IT Rules, 1962 for the financial year 2018-19. He stated that for the period under consideration the due date of filing the Statement of Financial Transaction was 31/05/2019. Since the appellant failed to file the Statement of Financial Transaction, that is why the ADDL./JDIT (I&CI), Jaipur issued a notice u/s 285BA(5) on 20/12/2019 which was served upon the appellant on 30/12/2019 for furnishing Statement of Financial Transaction on or before 28/01/2020. In want of compliance of notice he issued a show cause notice u/s 271FA on dated 07/02/2020 issued fixing the date of hearing on 24.02.2020. In response to this notice the assessee on 18.03.2020 furnished provisional receipt of statement of filing SFT return for the F.Y. 2018-19 along with the reasons for delay in filing SFT return vide page 2 of the Penalty order. However, the ld. Add. DIT/JDIT was not satisfied with the reply of the assessee and stated that in guise of reasons the assessee has stated their institutional problems which in any case cannot partake the character of reasons. These are purely Bank’s internal administrative and mechanism issues. Therefore, cannot be excused for reasons of delay in filing SFT.
In any circumstances, it is the statutory duty of the Bank to file correct statement and in the manner prescribed by the law by due date. The ld. Add.DIT/JDIT (I&CI) further stated that the reply submitted by the assessee is for sake of reply only and no where explains the reasonable cause for delay, therefore liable for imposing penalty. After referring the provision of Sec. 285BA, he imposed the penalty as under:
As per above provisions of the Act, the total period of default by virtue of Sec. 285BA(1) is 271 days (01.06.2019 to 26.02.2020). Accordingly penalty levied u/s. 271FA of the I.T. Act, 1961 is calculated as under:-
